Yahoo 2003 Annual Report Download - page 25

amounts of audio and video content to our users, such as gambling, sweepstakes, promotions, financial market regu-
the broadcast of music, film content, speeches, news foot- lation, consumer protection, content regulation, quality of
age, concerts and other special events, through our media products and services, and intellectual property ownership
and entertainment properties. We believe that users of and infringement can be unclear. In addition, we will also
Internet services such as the Yahoo! online properties will be subject to new laws and regulations directly applicable
increasingly demand high-quality audio and video content. to our activities. Further, the application of existing laws
Such content may require us to make substantial pay- to Yahoo! or our subsidiaries regulating or requiring
ments to third parties from whom we license or acquire licenses for certain businesses of our advertisers including,
such content. for example, distribution of pharmaceuticals, alcohol,
tobacco or firearms, as well as insurance and securities
For example, in order to broadcast music through our brokerage and legal services, can be unclear. Any existing
online properties, we are currently required to pay royal- or new legislation applicable to us could expose us to
ties both on the copyright in the musical compositions substantial liability, including significant expenses neces-
and the copyright in the actual sound recordings of the sary to comply with such laws and regulations, and
music to be broadcast. The revenue we receive as a result dampen the growth in use of the Web.
of our audio and video broadcasts may not justify the
costs of providing such broadcasts. Several federal laws, including the following, could have
an impact on our business. The Digital Millennium
Our failure to manage growth and diversification of our
Copyright Act is intended, in part, to limit the liability of
business could harm us.
eligible online service providers for listing or linking to
third-party Websites that include materials that infringe
We have experienced dramatic growth in personnel since copyrights or other rights of others. The Children’s
inception and expect to continue to hire additional per- Online Protection Act and the Children’s Online Privacy
sonnel in selected areas. This growth requires significant Protection Act are intended to restrict the distribution of
time and resource commitments from us and our senior certain materials deemed harmful to children and impose
management. Further, as a result of recent acquisitions additional restrictions on the ability of online services to
and international expansion, more than one-half of our collect user information from minors. In addition, the
employees are based outside of our Sunnyvale, California Protection of Children From Sexual Predators Act of 1998
headquarters. If we are unable to effectively manage a requires online service providers to report evidence of vio-
large and geographically dispersed group of employees or lations of federal child pornography laws under certain
anticipate our future growth, our business will be circumstances. Such legislation may impose significant
adversely affected. additional costs on our business or subject us to addi-
tional liabilities.
Additionally, our business relies on our financial reporting
and data systems (including our systems for billing users We post our privacy policies and practices concerning the
of our fee-based services), which have grown increasingly use and disclosure of user data. In addition, GeoCities, a
complex in the recent past due to acquisitions and the company we acquired in 1999, is required to comply with
diversification and complexity of our business. Our ability a consent order between it and the Federal Trade Com-
to operate our business efficiently depends on these sys- mission (the ‘‘FTC’’), which imposes certain obligations
tems and if we are unable to adapt to these changes, our and restrictions with respect to information collected from
business will be adversely affected. users. Any failure by us to comply with our posted pri-
vacy policies, the consent order, FTC requirements or
We are subject to U.S. and foreign government regulation of
the Internet, the impact of which is difficult to predict.
other privacy-related laws and regulations could result in
proceedings by the FTC or others which could potentially
We are subject to general business regulations and laws, as have an adverse effect on our business, results of opera-
well as regulations and laws directly applicable to the tions and financial condition. In this regard, there are a
Internet. As we continue to expand the scope of our large number of legislative proposals before the United
properties and service offerings, the application of existing States Congress and various state legislative bodies regard-
laws and regulations to Yahoo! relating to issues such as ing privacy issues related to our business. It is not possible
user privacy, defamation, pricing, advertising, taxation, to predict whether or when such legislation may be
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